Jobless numbers confound — here's an explanation

When the state's May unemployment numbers came out last month, it seemed that they'd been calculated in a math-free zone.

The data showed that Florida lost about 6,200 jobs last month, yet somehow unemployment fell from 7.2 percent to 7.1 percent.

Orlando and Fort Lauderdale produced equally funky results. They showed employment rising by about 11,000 in each metro area, even as the local jobless rates inched up.

None of that sat well with Aaron, a reader with an attitude and an itchy email finger. Gov. Rick Scott could talk all he wanted about the state's improving job market, but for Aaron, the numbers didn't add up.

"If we lost 6,200 jobs," he asked in a message, "how could we have a lower unemployment rate?"

It's a fair question, and I'll try to answer it. But first let's talk about the jobless rate.

As economic indicators go, few generate the buzz created by the monthly jobs report. Calculated by government geeks working under tight security, the report may be the single-most salient measure of a region's economic health.

But that doesn't mean it's well understood. Some people think it's simply a count of laid-off workers receiving unemployment benefits (it's not). Some think the process for determining it has been changed to benefit the Obama administration (it hasn't).

But the biggest source of confusion is that most folks don't know the report is derived from two separate surveys about jobs and unemployment.

The first samples about 65,000 households, asking people if they're working or looking for work. The results are used to calculate the unemployment rate – the percentage of people who aren't working but would if they could find a job.

The second survey focuses on job creation and destruction. The feds contact about 140,000 businesses asking about jobs, pay and hours worked. From this, they estimate the number of jobs added or lost monthly.

But sometimes they fight, and that's what happened in May. The household survey found that more Floridians (about 25,000) reported they were working, so the jobless rate dipped. But the survey of businesses found employers cut about 6,200 positions.

Which brings us to the central question: Why would the household survey indicate more people are working while the business survey reflects a loss of jobs?

Economists point to a few reasons:

The self-employed and freelancers don't show up in the business survey, but they count as workers in the household survey. Unpaid family employees would be counted in the household survey but be missed in the survey of businesses.

Generally, the household survey will identify as workers people striking out on their own, even if they work just an hour during the survey period. The survey of businesses, by contrast, reflects workers on a company's payroll.

Economists don't fret much if the surveys occasionally clash. Monthly reports are often revised, and many times those changes reconcile the results. They've also come to expect screwy numbers given the protracted, maddening nature of this recovery.

"In a more normal environment," said University of Central Florida economist Sean Snaith, "these measures would generally move in a similar fashion."

I explained this to Aaron – my email buddy – but I don't think he was convinced. As the governor's office was taking credit for state's improving jobless rate, Aaron was putting me in my place.

He mentioned something about drinking the Kool-Aid, and suggested my head was lodged in a place devoid of fact. (Joke's on you, Aaron, I'm not that flexible).

"Nothing is getting better," he wrote, "except in a liberal's mind."

At that point, I was beaten. After all, what do you say to someone who considers Rick Scott a liberal?